The ocean shipping line Maersk is on track to earn over $22 billion in profit (EBITDA, in financial terms; earnings before Interest, Taxes, Depreciation and Amortization, if you are not familiar.) this year. Free cash flow will be over $14 billion. That is a lot of money.
Capital expense, for new ships and the like, will be around $7 billion.
This graph, from their annual report, shows Maersk’s EBITDA over the last several years.
YOu can now have service from Cleveland to Antwerp, Belgium, Europe on a dedicated container ship. It’s not a large one– 869 teu (twenty-foot equivalent units, half of a normal-40 foot ocean container). But it provides a link for Mid-American businesses that avoids using either coast. Antwerp is a major European port.
One of the risks in this trade is the two-month closure of the St Lawrence river locks for maintenance each year. If your goods will be trapped, there is a free-trade zone (FTZ) at Cleveland so you won’t have to pay duty on your detained cargo– it won’t actually be landed yet.
Previously the firm running it, Spliethoff, moved some container trade using a multipurpose ship.
People have been trying to revive the Great Lakes ship trade for a long time. We will see if this gambit works. It looks like Spliethoff has thought through a lot of the problems and brought solutions for some customers.
Liner shipping alliances were created years ago when there wasn’t enough containerized cargo for many competing ocean container carriers (sometimes called liners). They have evolved through time, a bit, but still allow several ocean carriers to band together to serve a particular route.
For instance, from Shanghai to LA and return, an alliance might provide weekly service. The companies then rotate in providing that ship for the service. If you book with one of thecompanies, you don’t know whose ship will be carrying the cargo, but it will be one of the members of the alliance. If everything goes smoothly and there are no delays, it should notmatter to the shipper whose ship they are on.
Alliances go by clever names such as THE Alliance (Hapag-Lloyd, ONE, & Yang Ming). Here’s a summary of facts about alliances, including who’s in each.
But when disruptions occur, as now, and ships don’t sail on schedule either because they are postponed by the line, or because of congestion in either the loading port or the unloading port, it becomes a problem.
The article outlines some of the complaints. Alliances have to be authorized by the specific counbtry they dock in. There is actually a bill in the US Congress to suggest that the FMC (Federal Maritime Commission) be given stronger powers to investigate problems and push the alliances to provide fair service to all customers.
Supply Chain and Logistics 